Will Apple Buy Snap?

Owen Kmety of the Chicago Blackhawks uses his iPhone to put a Snapchat filter on Edmonton Oilers’ Jujhar Khaira during a game, January 7, 2018.By Patrick Gorski/Icon Sportswire/Getty Images.

Over the past few weeks, employees of Snap have been moving their headquarters a few miles across Los Angeles, from the Venice Beach boardwalk to a massive, 300,000-square-foot space at the Santa Monica Business Park. This new corporate home will help house the company’s now-3,000 employees and offer a metaphorical glimpse of how much Snap has grown over the past few years—from a single dorm room to a smattering of disparate office buildings collected among the weed shops and bodybuilders on the grimy boardwalk to, now, an office a block from Santa Monica Airport. From the windows of the new Snap offices on Ocean Park Boulevard, Snap employees now see Gulfstreams, Bombardiers, and Embraer private jets, filled with billionaires from Silicon Valley swooping into town. Notably, however, some of these venture capitalists, entrepreneurs, and technology C.E.O.s have their eye on Snap, too. Recently, they have been sharing a theory that Snap could one day see its headquarters move yet again, this time to Cupertino, right smack in the middle of Apple’s own office park. The reason, according to this conjecture, is that Apple could end up buying Snap.

The suggestion that the two companies should merge has been discussed for a long time, but I first heard this theory floated—and yes, it’s just a theory; as far as I’m aware, there have not been any formal talks between the companies—in a serious way a couple of weeks ago. And from the moment it was espoused, I could see why it was a fascinating Silicon Valley parlor game: from a business perspective, such a partnership would make sense for both companies, perhaps more than any speculative partnership that I’ve heard about in years. For Apple, Snap could offer value on multiple levels. Beyond iMessages, which some see as a sort-of inclusionary social network, Apple doesn’t have a foothold of any kind in the space. (And, as anyone who recalls Ping well knows, that’s not for lack of trying.) Like Snap, Apple covets teens. Apple and Snap also have a common competitor in Facebook, which Apple may begrudgingly need (it’s one of the reasons people are so addicted to its phones) and Snap straight up hates for consistently copying its product features. Apple, with its nearly $900 billion valuation, also has the money. The company currently has almost $300 billion—yes, billion—in cash on hand. Snap currently has a market cap of around $22 billion.

But perhaps most important, Snap appears key to Apple’s vision of itself and its future. Speaking on an earnings call last year, Tim Cook told investors that he sees the future of Apple as an augmented-reality company, and that A.R. will “change everything.” “Simply put, we believe augmented reality is going to change the way we use technology forever,” Cook said. “We’re already seeing things that will transform the way you work, play, connect, and learn.”

Funny thing is, that is exactly the way Snap sees the world, too. “Snap’s focus on privacy and private communication is very much in sync with Apple’s ideas around privacy,” Om Malik, a partner at True Ventures and an early proponent of augmented reality, told me recently while explaining why an Apple acquisition of Snap is something he believes could absolutely happen. “In addition, Snap is the most advanced A.R. company in terms of understanding real-term data and correlating with information and intelligence that humans like to use.” Snap also offers Apple an extraordinary enhancement of it core business of selling computers and smartphones. “Snap would allow Apple to keep in sync with the next generation of hardware buyers and use it as a way to sell its hardware,” Malik said.

It’s true: if you’re Apple and you want to ensure that the next generation of tweens getting a new smartphone get your phone—the more expensive iPhone—what better way to lure them in than with the app most coveted by tweens? Apple could still allow Snap to remain on Android devices, but it could focus on making the iOS version of Snap far better, releasing new hidden features (something kids are obsessed with) for iPhones first and offering specialized augmented-reality features that would only work on Apple’s platforms. Snap’s Spectacles also look awfully similar to some patents Apple has filed for its own glasses.

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As compelling as Apple’s motivations may be, Snap’s appear even more persuasive on account of, among other things, one simple argument: over the past year, Snap has been under constant attack from Facebook, and in turn Wall Street. Fighting such a massive juggernaut is proving to be an exhaustive battle. Facebook has been relentlessly copying Snapchat’s product features to great success, but as the recent Snap earnings showed, millions and millions of people are sticking with the platform. (Even if Kylie Jenner is having second thoughts.)

This is because Evan Spiegel has proven time and again that he is a genuine “product C.E.O.” who is capable of coming up with ideas that are novel and keep users excited. Mark Zuckerberg, on the other hand, is not an idea guy but a strategy genius. And that doesn’t necessarily ensure victory. As one tech insider recently pointed out to me, just because you are big, and you have the resources to copy, doesn’t mean you’re going to successfully destroy a competitor. Just look at Microsoft, which for 20 years had a business model that was, literally, copy then kill. While it succeeded with some small startups and with the biggest of them all, Netscape, it failed with almost every other established company it tried to destroy, including Nintendo with the Xbox, Adobe with Microsoft Expression Studio, Google with Bing, and so many more. Oracle, which has copied dozens of features from companies big and small in the enterprise space, has failed to put them out of business. And now Facebook is trying to do the same thing with anything that steps within 5,000 feet of the social space, Snap included. For Snap, it seems worthwhile to team up with some added muscle. As anyone who has watched a few episodes of Game of Thrones knows, sometimes House Targaryen (Snap) has to join forces with House Stark (Apple) in order to defend themselves against House Lannister (Facebook).

For the better part of the past decade, there was a similar theory floating around Silicon Valley that Apple should buy Twitter. In 2012, I even reported that there had been talks between Apple and Twitter discussing either a massive investment in the social network or a possible acquisition. But neither of those scenarios happened, and Apple has since breathed a dozen sighs of relief that it never followed through with those early talks. As 10,000 headlines have told us since, Twitter has become synonymous with Russian election meddling; it’s known as a place where people verbally tear each other to shreds; it’s the home of millions of bots which steal people’s identities and incite division in the country; and it is—scariest of all—a tiny little tool that could be used by the president of the United States to set off World War III. All things that don’t necessarily align with Apple’s corporate culture, which is much more family-friendly and anodyne, and (one could only assume) against its products being used to set off a thermonuclear war.

Snap, on the other hand, doesn’t have those problems. It isn’t filled with fake news, nor vitriol between its users, and I’d guess that Donald Trump wouldn’t know how to use Snap if it were the last social platform or communication tool on Earth. One thing is clear: if Apple doesn’t buy Snap, it might turn around to regret it. If Snap can manage to defend itself against the copy-and-paste attack of Zuckerberg, Snap could very well end up competing with Apple for teens’ eyeballs in an augmented-reality world. And that could end up being a fight that Tim Cook can’t win.